2017 growth projection revised to 3.1% as mining and forestry sectors contract

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By: Bibi Khatoon

Guyana saw a growth rate of 2.2 percent for the first half of this year compared to a 2.0 percent for the same period of 2016. This was revealed in the Mid-year report which was presented to Cabinet at this week’s meeting and was on Friday laid in the National Assembly by Finance Minister, Winston Jordan.

The marginal increase was attributed to the expansion of the agriculture sectors. According to the Minister of Finance, the housing sector has begun to make some contributions following the Housing Expo recently hosted, while the manufacturing and services sector has seen some growth.

However, he noted that the under-performance of the sugar sector has led to the Finance Ministry’s downward revision of its 2017 growth projection. The higher than anticipated export prices for this commodity and higher cane yields, did not make up for its 12.4 percent decline in production.

Production of sugar was recorded at 49,606 tonnes at the half year, compared to 56,645 tonnes during the first half of 2016.  Unfavourable weather; and strikes and absenteeism were listed as major factors affecting the sector.

The revised growth target for 2017 is 3.1 percent from a previously stated 3.8 percent.

The Finance Minister highlighted during an interview with News Room that much of the 2.2 percent economic growth came from the rice sector with the introduction of new markets for rice this year.

Non-sugar growth declined from 3.1 percent, in the first half of 2016, to 2.4 percent in the first half of 2017.

The forestry industry contracted by 18.2 percent in the first six months of 2017, compared to the same period in 2016. Declining production within the forestry industry was due to structural changes in the industry.

The Minister said government is expected to give out concessions formerly owned by Bai-Shan-Lin, during the second half of this year to improve production of the sector.

While Guyana’s economic growth last year was fuelled by strong performances in the gold, diamond and quarrying industries and was expected to continue this year, both sectors contracted.

According to the report, the mining and quarrying sector contracted by 4.0 percent, while Gold production fell by 1.7 percent to 317,096 ounces, compared to the same period in 2016.

The bauxite industry declined by 11.5 percent due to reduced production. This was attributed to poor weather combined with mechanical issues at one of the mines. However, export earnings from bauxite rose by US$4.4 million to US$50.7 million.

Despite reports of a shortage in foreign exchange in the second quarter of 2017, the Bank of Guyana’s exchange rate between the Guyana dollar and United States dollar remained stable in the first half of 2017 at G$206.5 per US$1, same as that recorded in June 2016.

Additionally, at the end of June 2017, Revenue collection increased to $97.2 billion at end June, 2017, 13.1 percent above the corresponding period in 2016.

However, Guyana’s total public debt amounted to US$1,637.7 million, representing an increase of 5.5 percent compared to the 2016 half year position. Of the total public debt, external debt amounted to US$1,200.7 million or 73.3 percent while domestic debt was US$437.0 million or 26.7 percent, reflecting a marginal increase in both external and domestic debt.

Public external debt stock increased by 5.0 percent, from US$1,143.5 million at end June 2016 to US$1,200.7 million at end June 2017.

The report prepared by the Finance Ministry stated that this was primarily due to increased disbursements from lending banks and the transfer of financial obligations for the Marriott Hotel to the Government, due to Atlantic Hotel Inc. (AHI)’s inability to meet the repayment. AHI is the owner of the Guyana Marriott Hotel Georgetown.

The financial report disclosed that commercial banks’ small savings and lending rates reduced in the first half of 2017.  The small savings rate was recorded at 1.18 percent in June, 2017 compared to 1.26 in June, 2016.

The midyear report stated that non-financial public sector deficit is expected to be in line with the budget as the anticipated over-achievement of the revenue target should compensate for the additional expenditure in areas of crime and security and public infrastructure for the remainder of 2017.

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